suppliers are right to worry about consolidation
As everyday low prices have become a way of life for most consumers, so everyday low cost has become a fact of life for retailers and their suppliers.
There’s nothing wrong with that per se; all businesses should strive to cut the fat out of their system. And retailer consolidation means suppliers must be low cost, efficient, competitive and pro-active if they are to prosper.
But what happens when even these suppliers start cutting into bone in their relentless search for new efficiences? Well, one obvious consequence is that they too start consolidating. Plants close, companies merge and then production starts shifting overseas. I’m not suggesting for one moment that inefficient plants - or companies, for that matter - should be kept alive. Darwin’s theory holds true: only the fittest shall survive in this industry. But when the fittest start moving to lower-cost sites in Europe then I think it’s time to be worried.
The experts insist we will not see vast numbers of jobs or our manufacturing expertise being exported eastwards with the opening up of the EU.
But for many companies in many sectors, that confidence appears to fly in the face of logic. After all, UK manufacturers are disadvantaged in many ways - from high labour costs to the fact we are geographically out on a limb. The centre of Europe has shifted and we even further away. Lower-cost plants on the continent find it easier to build economies of scale that allow them to compete better and which, sadly, make them much more attractive places from which to serve the UK.
And it’s happening all the time, often unnoticed. The food and drink industry is the last real jewel of British manufacturing, yet I fear that it is not in as healthy a state as many believe.
There are no official figures to back up my claim. But occasionally a plant closure captures headlines and makes me think about the changes under way. Terry’s chocolate not made in York? Surely some mistake? Nope.
But Kraft is not the first, nor will it be the last, to restructure its manufacturing base in this way. So it’s hardly surprising that 88% of those who responded to our reader panel believe nobody is safe in this brave, new, hyper-efficient, world. As one supplier put it: “The outlook for British manufacturing is potentially bleak.”
I fear that he may well be right.
is anybody safe? nope
As everyday low prices have become a way of life for most consumers, so everyday low cost has become a fact of life for retailers and their suppliers.
There’s nothing wrong with that per se; all businesses should strive to cut the fat out of their system. And retailer consolidation means suppliers must be low cost, efficient, competitive and pro-active if they are to prosper.
But what happens when even these suppliers start cutting into bone in their relentless search for new efficiences? Well, one obvious consequence is that they too start consolidating. Plants close, companies merge and then production starts shifting overseas. I’m not suggesting for one moment that inefficient plants - or companies, for that matter - should be kept alive. Darwin’s theory holds true: only the fittest shall survive in this industry. But when the fittest start moving to lower-cost sites in Europe then I think it’s time to be worried.
The experts insist we will not see vast numbers of jobs or our manufacturing expertise being exported eastwards with the opening up of the EU.
But for many companies in many sectors, that confidence appears to fly in the face of logic. After all, UK manufacturers are disadvantaged in many ways - from high labour costs to the fact we are geographically out on a limb. The centre of Europe has shifted and we even further away. Lower-cost plants on the continent find it easier to build economies of scale that allow them to compete better and which, sadly, make them much more attractive places from which to serve the UK.
And it’s happening all the time, often unnoticed. The food and drink industry is the last real jewel of British manufacturing, yet I fear that it is not in as healthy a state as many believe.
There are no official figures to back up my claim. But occasionally a plant closure captures headlines and makes me think about the changes under way. Terry’s chocolate not made in York? Surely some mistake? Nope.
But Kraft is not the first, nor will it be the last, to restructure its manufacturing base in this way. So it’s hardly surprising that 88% of those who responded to our reader panel believe nobody is safe in this brave, new, hyper-efficient, world. As one supplier put it: “The outlook for British manufacturing is potentially bleak.”
I fear that he may well be right.
is anybody safe? nope
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